Date:02/10/2008 URL: http://www.thehindu.com/2008/10/02/stories/2008100250460100.htm

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‘Insulating economy our priority’

Harish Khare

Less inflow likely: Manmohan

ON BOARD SPECIAL AIRCRAFT: Prime Minister Manmohan Singh has said his government’s foremost priority was to insulate the Indian economy “to the maximum possible” extent from the global financial meltdown.

Interacting with the media on Tuesday-Wednesday night, en route home from Paris, Dr. Singh argued that India was not all that susceptible to the upheavals in the western markets.

“We are not immune from what happens in the outside world. But we are not vulnerable to the extent that some other countries are vulnerable,” was his formulation.

At the same time the Prime Minister did concede that the global crisis could lead to a decline in the capital inflows because the foreign investors may “need liquidity, [and] take money out.” In such a situation, the stock markets would be affected and the Indian corporate houses would have difficulty raising resources abroad.

“And if there is a recession in the developed world, particularly the United States, it could hurt our exports. We have to work out a coherent strategy to protect our interests, and we are confident we will be able to do so,” he said. Despite all this the Prime Minister was confident that the economy would still be able to grow at the rate of 7.5 per cent to 8 per cent – even if a decline from the current rate of 9 per cent – and that would still make India “the second fastest growing economy in the world.”